Property Valuation
A capitalization rate is derived in appraisal by:
AThe appraiser's personal judgment
BAnalyzing sales of comparable income properties and extracting the relationship between NOI and sale price✓ Correct
CUsing the mortgage interest rate plus 2%
DMultiplying the gross rent multiplier by 100
Explanation
Cap rates are typically extracted from the market by analyzing comparable income property sales and dividing the NOI by the sale price, reflecting what investors are paying for income streams in that market.
Related Arizona Property Valuation Questions
- A commercial property's 'potential gross income' (PGI) represents:
- A 'reconciliation' in a final appraisal report involves the appraiser:
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